By DON FENLEY
TRI-CITIES, Tenn. – Tri-Cities area pending sales fell to a five-year low in December. Sellers accepted 421 new contracts, down 184 from November and 236 fewer than in December last year – a 35.9% decline.
Pending sales are a leading indicator of housing activity based on signed contracts for existing single-family homes and condominium sales in the region monitored by the Northeast Tennessee Association of Realtors (NETAR). Since resales go under contract 30 to 60 days before they close, accepted contracts offer insight into home sales’ direction.
“Many factors drove December’s dramatic decline,” NETAR President Jan Stapleton said. “Most people buy a home based on their ability to afford the monthly mortgage payment. So, higher interest rates and fears of a recession were factors. There’s also a seasonal factor. The housing market typically slows during the holidays and the first months of a new year. The number of people checking out listings and open houses shows high demand. Activity should pick up next month.”
Some of that activity is being seen at mid-month January.
The average mortgage rate has dropped to its lowest level since September as financial markets have been boosted by data that showed inflation is slowing.
A slowly declining mortgage rate combined with a slowly increasing inventory and sellers willing to come off their asking price is bringing some buyers off the sidelines.
According to NETAR, close to half of December’s existing home sales were discounted. The average discount was $16,400.
At mid-month, the region had 1,331 properties on the market, down from 1,384 the previous month. At the end of December, the region had a 1.8-month inventory of homes on the market for sale. That’s the time it would take to sell everything on the market at the current sales pace.
The typical home sold in December was on the market for 50 days before it closed. That’s up one day from November and the eighth monthly increase. However, it is still five days less than it was this time last year. Time on the market is a demand indicator. When it increases, demand is softening. When it declines, demand is rising.
The current outlook for 2023 is for a continuation normalization of sales and flat to slightly higher prices. The lack of inventory continues to keep upward pressure on prices. The 2024 outlook is for a more robust market.
Categories: REAL ESTATE
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